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Retailers tap into shoppers' do-gooder spirit

Many brand name companies are pledging to donate part of the profit made from select products to support humanitarian causes and are tapping into consumers' growing desire to do good deeds with their purchasing dollars. But critics say campaign is crass attempt to make money using fatal disease as marketing vehicle.
Product Red merchandise on display at a Gap store in San Francisco. Gap donates half the profits from Product Red items to the Global Fund to fight AIDs.
Product Red merchandise on display at a Gap store in San Francisco. Gap donates half the profits from Product Red items to the Global Fund to fight AIDs. Noah Berger / AP
/ Source: The Associated Press

Walk into any Gap clothing store this holiday season and expect to see red T-shirts, red hats and red bracelets.

Of course decorating with red is nothing unusual this time of year, but the merchandise is meant to remind customers of something not often associated with the holidays: the global AIDS epidemic.

Gap is one of a number of companies this year who are tapping into consumers' growing desire to do good deeds with their purchasing dollars.

Other retailers selling products to benefit humanitarian causes include Bath and Body Works, a division of Limited Brands Inc., which recently launched a line of candles and fragrances that benefit the Elton John AIDS Foundation, as well as Macy's, which is selling baskets made by Rwandan widows to help support that nation's developing economy.

"I think the demand for these types of products has always been there, but companies just weren't filling it until now," said Dan Henkle, Gap's vice president for social responsibility.

For the Gap, filling that demand means donating half the profits from all items marked with a Product Red label to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Items launched in October range from a $20 candle to a $350 leather jacket modeled by director Steven Spielberg in the company's star-studded marketing campaign.

Product Red is the brainchild of U2 rock star and activist Bono and philanthropist Robert Shriver, who convinced companies like Gap Inc., Apple Computer Inc., and American Express Co. to design customized red products.

The portion of profits donated to the Global Fund varies for each company, with Apple donating $10 from each $199 red iPod sold and American Express pledging one percent of each purchase made with its red credit card. All of the companies have contracted to promote the products for at least four years.

But don't confuse this new spirit of giving with a charity, say Product Red developers.

"Our focus is really on creating a sustainable business model, and the only way to do that is to make it beneficial for the companies as well," said Julie Cordua, vice president of marketing for Product Red. "Because if it's something that makes good business sense for them they're going to want to keep doing it."

Some critical of campaign
But it's the lingering "business sense" hanging over the red campaign that has attracted heavy criticism from some corners.

More than a few bloggers have pointed to the crassness of companies using a deadly disease as a marketing vehicle to sell more clothes and electronics. Radio talk show host Michael Medved has charged on his blog that companies have used the campaign as an excuse to hike prices and make more money for themselves.

"A Gap long-sleeved T-shirt that last week cost $14.50, now goes for $45... meaning the company still gets an extra $8 of your money on an absurdly overpriced piece of cloth," Medved writes.

Other online critics point out that since most of the money from red products will go toward buying medicine for AIDS victims in Africa, the campaign will help bankroll pharmaceutical companies who are unwilling to distribute their drugs for free.

So what's the payoff for participating in an effort that attracts such tough scrutiny?

"I've always said 'doing good is good business', and I recommend it to my clients," said Britt Beamer, chairman of marketing firm America's Research Group.

According to Beamer, the positive feedback generated by charitable outreach always offsets any dollar loss to the company.

"What's important is what it says about our brand," said Brad Stevens, Starbuck Corp.'s vice president of U.S. Marketing.

Starbuck's 'cheer passes'
The Seattle-based coffee giant recently kicked off an effort to hand out 10,000 cards called "cheer passes" daily, asking recipients to perform one act of kindness for someone else and pass the card along. The drive is not tied to any cause and the cards are not reedemable for merchandise, but recipients can track their card's progress online.

"It says that we at Starbucks are willing to use our resources to try and start this chain of good will," said Stevens.

Twenty years ago the majority of Americans said the measure of a reputable company was the number of years it had been in business, according to Beamer. Today only six percent of Americans judge a business by its longevity.

"I think consumers saw all these big companies go out of business — the Montgomery Wards of the world — and concluded that the measure of a quality company had to be something more," Beamer said.

Some businesses have begun promoting the way they treat their workers as the measure of their quality as a company.

In fact, the founders of startup clothing company Fair Indigo have based their entire business strategy on the idea that consumers will seek out merchandise made by people working for decent wages.

The Madison, Wisc.-based apparel maker recently launched its first line of "fair trade" clothing, meaning that all the clothes were made by workers in developing countries paid above minimum wage and not working in sweatshop conditions.

The term "fair trade" is typically applied to deals with farmers growing commodities like rice and sugar, but the founders of Fair Indigo are betting that the same consumers who drink fair trade coffee, if given the choice, will also opt for fair trade clothes.

"Clearly there are more people out there becoming more conscious of how their purchases affect society and the environment," said CEO Bill Bass, who co-founded the company after leaving his job as vice president of e-commerce at Lands' End.

Whereas in his previous job, Bass says he would push factory owners in Asia and Latin America to make clothes for less money, he is now insisting they take more money — and pass it along to the workers.

"It really freaks some of them out," Bass said. "They realize pretty quickly though that this will actually reduce their turnover and help them attract the best workers.